Lower exchange volumes for residential properties, combined with an increase in employee costs, weighed on LSL Property Services’ (LSL) core estate agency financials division last year. Retail exchange revenues fell 9 per cent for that business, which given the high level of operational gearing, meant underlying operating profit margins dropped to 8.1 per cent, from 10.9 per cent in the prior year.
That division’s performance offset a 9 per cent rise in surveying financials revenue, which benefited from the start of its surveying and valuation tie-up with Lloyds (LLOY). A 4 per cent decline in group underlying operating profits fed through to a fall in the annual dividend, which is based on a payout ratio of between 30 per cent and 40 per cent of after-tax operating profits.
Management has implemented some self-help measures, reflecting a tougher residential property market, which include reorganising its Your Move and Reed Rains estate agency network to 144 “keystone” branches, which will be situated in core locations across the UK and will generally have larger teams of dedicated experts in residential sales, lettings and financial services roles.
Analysts at Numis expect adjusted pre-tax profit of £34.5m and EPS of 27.5p for 2019, from £34.5m and 27.2p, respectively, in the prior year.
| LSL PROPERTY SERVICES (LSL) | ||||
| ORD PRICE: | 254p | MARKET VALUE: | £261m | |
| TOUCH: | 251-255p | 12-MONTH HIGH: | 305p | LOW: 210p |
| DIVIDEND YIELD: | 4.3% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 139p* | NET DEBT: | 23% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 288 | 31.9 | 24.5 | 12.3** |
| 2015 | 301 | 38.6 | 29.7 | 12.6 |
| 2016 | 308 | 63.5 | 49.2 | 10.3 |
| 2017 | 312 | 40.1 | 32.6 | 11.3 |
| 2018 | 325 | 23.1 | 17.4 | 10.9 |
| % change | +4 | -42 | -47 | -4 |
| Ex-div: | 21 Mar | |||
| Payment: | 07 May | |||
| *Includes intangible assets of £192m, or 187p a share **Excludes special dividend of 16.5p a share | ||||
